Title: A cross-industry analysis of working capital management in India: pre and post financial crisis
Authors: Harsh Partap Singh; Satish Kumar
Addresses: Department of Management Studies, Malaviya National Institute of Technology, Jaipur, India ' Department of Management Studies, Malaviya National Institute of Technology, Jaipur, India
Abstract: The main objective of this paper is to evaluate the working capital measures such as cash conversion cycle (CCC), days receivable outstanding (DRO), days payable outstanding (DPO) and days inventory outstanding (DIO) across industries and determine whether differences exist among different industries with respect to working capital measures in India. In addition to that, an attempt has also been made to test whether the efficiency of working capital management (WCM) in Indian companies has improved after the global financial crisis (GFC) of 2008. To achieve these objectives, financial data of 896 firms listed on Bombay stock exchange (BSE) for the period of 12 years (2002-2013) has been analysed. The results of this study indicate that working capital measures (DIO, DPO, DRO and CCC), are significantly differ in various industry groups. It is also observed that Indian companies have become more efficient in managing working capital after the GFC of 2008.
Keywords: cash conversion cycle; days receivable outstanding; days payable outstanding; days inventory outstanding; performance index; utilisation index; efficiency index; global financial crisis; cross-industry analysis; working capital management; India.
International Journal of Management Practice, 2017 Vol.10 No.2, pp.152 - 174
Received: 27 Oct 2015
Accepted: 07 Apr 2016
Published online: 25 Nov 2016 *